American SEC begins purge of cryptocurrencies by targeting Bittrex

Bittrex.com – one of the world’s largest cryptocurrency exchanges announced that it will stop trading following cryptocurrencies: Bitshares, Bata, BT Token (Draco), DAR.

Source: Bittrex

Bitshares is largest from these cryptos, holds $155 mln in capitalization and fell in just a few minutes by a 24%, while Draco’s price decreased 60% and DAR -58%. This means effectively death for these virtual online coins and big losses for unlucky investors.

A very bad day for Bitshares: nearly 60 million USD evaporated from investors accounts. Source: coinmarketcap.com.

The reason behind this purge is SEC (U.S. Securities and Exchange Commission) demand to stop these coins from being offered by Bittrex, because they are securities. SEC just a few days ago exposed cryptocurrency scam, charging two companies with defrauding investors in a pair of ICOs purportedly backed by investments in real estate and diamonds. REcoin meant to be “The First Ever Cryptocurrency Backed by Real Estate.”, but in fact it turned out to be nothing more than a scam.

Securities are tradable financial assets like stocks, futures contracts for commodities or currency pairs and to trade one, trading institution needs to obtain US license and meet the requirements, which none of virtual coin exchanges can met, because of intangible value of cryptos. No one can trade securities in US without SEC permit and that is big problem for businesses offering these online currencies to investors.

What does it mean for cryptocurrencies?

In fact it shouldn’t be a surprise for anybody , because SEC doesn’t want to list Bitcoin as a financial product, and actually warnsinvestors about dangers of buying virtual internet coins such as as Bitcoin. In 2014 SEC issued an “Investor Alert about Bitcoin and Other Virtual Currency-Related Investments” where this financial institution raises a few juicy points about Bitcoin:

“Bitcoin might be a Ponzi scheme”

“Bitcoin users may be targets for fraudulent or high-risk investment schemes”

“Bitcoins are not legal tender”

“Bitcoin exchanges may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware. Bitcoins also may be stolen by hackers.”

“Bitcoin does not have an established track record of credibility and trust”

SEC also stresses that exchanges need to obtain their permits before selling – but in fact, none of crypto exchanges bothers with such trivial matters.

Especially larger virtual coins like Bitcoin and Ethereum are vulnerable, because they aren’t back by anything more than a firm beliefs and lambo dreams, so they aren’t really a real financial assets. SEC uses exact same argument as Chinese regulators, who closed all virtual exchanges in China just few days ago, including sales of Aliexpress smartphones.

If SEC will follow this path and starts targeting other US exchanges, it means a unrecoverable crash for Bitcoin and Ethereum. As Twitter user StartaleTV noted – “all alt are up in the air now”. I would say more: it’s possible end of Bitcoin and other main cryptos like Ethereum. SEC isn’t working too fast – but if it starts regulations on wide scale, it will effectively kill Bitcoin fad.

My name is Maciej Włodarczak and I have 10 years of experience in making money on financial assets. I own various online ventures and I am a contrarian eToro Popular Investor with more than 20-30% yearly gains.

What is it that actually is backing US currency? How is it any less virtual than crypto? and you also said only Government can issue currency? As in the Federal Reserve? This is the Government agency errr I mean Private company you trust?

Hahaha.. Stock Traders Keep Dreaming! Removing coins from one exchange means NOTHING! We will trade on any exchange. Matter of fact, we don’t even need exchanges anymore. Decentralized exchanges are popping up everywhere! Good with your rigged game!

BATA cap fell since yesterday in market cap from $4 mln USD to $1,3 mln USD. Will you pay back almost $3 mln that all holders lost? No – and in case of real financial instruments you would be obliged to.

Before I ever learned about cryptocurrencies I was aware of the fact that the US dollar, (the currency standard of which most developed nations of the planet base their currencies upon) is about to crash to zero. It’s the result of printing money (at the whim of some central authority) that is backed by absolutely nothing. A country’s currency is nothing more than a representation of their productivity, i.e. their ability to produce something in exchange for the IOU they have written (their currency). Here in the USA the last president decided that he would run up the debt to $20 trillion and then pay a large segment of the population to stay at home, sit on the couch, watch television and receive free internet and cell phones. So not only has the US government written IOUs which it can’t honor by printing an extra $10+ trillion of national debt, it has made itself more and more unproductive by teaching multiple generations that they can sit at home and they will get a government check every month. And their answer to this problem is to just print more money, or in this case create more debt that they have absolutely no way of paying. I realized that it was only a matter of time before this bubble would burst and there will be a world-wide cataclysmic shift of economies. Every developed nation will get sucked into the same whirlpool that the USA will be in, and there is no swimming out of it. The Great Depression will have nothing on this one!
And then I came across cryptocurrencies. I read the white paper and did my own research and I realized that the cause of the fiat currency crash that is inevitably coming is completely taken out of the equation with a decentralized cryptocurrency. It is such an elegant solution and the really beautiful thing about it is that there is really no way anybody can stop it. Do you really think the US government will outlaw cryptocurrencies when nations like Japan and the Ukraine are positioning themselves to embrace them? You can see that even though China acts like it is outlawing cryptos it is actually trying to lure other nations to do the same so that they can pull a big switch? There is too much government sponsorship going on in China behind the scenes. If the US and the IMF try to outlaw cryptos they are essentially going to make themselves irrelevant. People will flock to the crypto space when the dollar crashes and then it will be all over for fiat currencies, and unless they want to turn off the internet and destroy a multi-trillion dollar global economic machine and cause even more death, destruction and starvation then there is really nothing they can do to stop it. The jeanie is out of the bottle. You can’t unring this bell. It may be a rough road getting there but we will all get there. But you just hang on to that dollar bill and let’s see how that works out for you…

Before crypto I flipped antique photos on ebay as a hobby, if you think crypto is volatile, imagine spending $500 for a civil-war daguerrotype, re-selling it on ebay and it ends up going for $300, there you’re out $200. But did I ever beg the government to come protect me or bail me out? No, because i’m a responsible adult who does with my money what I want. You win some, you lose some.

You are correct though crypto coins are not legal currencies, but by the IRS’s own definitions coins is property, akin to the photos I used to sell. So how can the SEC label it a security while another branch of government disagrees, were my antiques securities? Is my Adobe Cloud license key a security, because essentially that is all coins are are cryptographic keys. This all gets real fuzzy in the 21st century.

Personally I think mature adults are capable of making their own decisions, i’ve made more money in crypto in one year then I could ever have hoped to make in a lifetime, and all this talk of regulation, China bans etc. has done more to kill the price of the market as a whole lately then scams have, is this what is considered protecting investors? Snatching money out of the hands of working class people who found a nice niche in life that is profitable and easy to get in? I’m not a moron and I doubt 90% of other traders are either, we know its volatile and that is exactly how we like it. Regulating it is one thing, threatening to outright destroy a whole market is another.

And if you think crypto is a fraud, how can these social media companies like Snapchat which turn no profit and deals primarily in teens sending child porn to each other be valuated at $17 BILLION dollars? Where are the regulators when it comes to outright con jobs like that? And yet people call Bitcoin at $70b a “bubble”.

They’re “abandoning this ship,” so hard that it’s growing at a rapid pace each and every day. Are you even thinking about what you write? You aren’t instilling much trust in your audience . . . You’re coming across as someone who feels threatened and is now switching to a defensive posture that doesn’t take reality into account.

False equivalence. Flat earth is flat earth (I think it’s round). Anti-vax is anti-vax (I think it’s poison). Not sure what value is served by trying to lump them together with “rich banksters and evil government”, which you’ve done nothing to dispel, really. Your love for the Fed doesn’t even address the fact that it IS a private corporation, beholden to no one, and it has the US government by the balls. And it’s controlled by….um….you know who.
Thanks for your insight, regardless.

Hi Maciej, for something to be a security or not it must be subjected to the Howie Test. According to the TXSRB, The Tokens & Exchange Self-Regulating Body, Bitshares is a clean token and will not be subject to SEC or other government crackdowns which is happening right now!

You seem like an intelligent guy so I am confused why you are saying that Bitshares is a security. Perhaps you should be more research before reporting your FUD unless of course that’s really your real intention

This pompously named, self-proclaimed “Tokens & Exchange Self-Regulating Body” of yours is not even a private organization let alone governmental one, and its Google spreadsheet is irrelevant for any valuation of regulatory bodies.

So the SEC decision makes the US very cryptocurrency and blockchain unfriendly. Definitely not the smartest move ever, one step backwards. People will move else where. The next step in the blockchain and cryptocurrency evolution will be accelerated with decentralised exchanges. At that point no-one will care about the SEC and it becomes obsolete.

Also makes me wonder just what they will approve, with everyone waking up to blockchain technology and realising just how important it is. No-one will want to touch some blockchain with a centralised coin with a ten foot barge pole!

Even if SEC decided to ban crypto, it ain’t going to stop people invest in crypto.

What’s make you think Bitcoin and other cryptocurrency will die ?

It’s only 140B market and suddenly SEC start to panic to follow china footsteps to ban crypto ICO and exchanges.

Oh wait, why even SEC follow china footstep? When is this so called powerful SEC even want to follow China? Why SEC didn’t ban Facebook, Amazon when China Ban them ?

If you are thinking Japan will ban Bitcoin, Guess this is where you are wrong. Mt.GOX was a disaster in crypto history, that is why, Japan take the first step to come out with regulation in regards to Bitcoin, and now, they are friendly country that allow Bitcoin to boom.
Have you even read the latest 11 exchanges has been given license to operate as cryptocurrency exchanges ?

Now, you are laughing everyone who invest in cryptocurrency, but down the road in 3-5 years, we will look back at this article again and laugh at you.

Best condition? This is made me laugh. Hedge funds for one example have been shutting down at a record pace. Those liquidations aren’t reflecting in the market. Figure out who’s pulling the strings on the stock market or you can just keep living in la la land

Disclaimer

All trading involves risk. Only risk capital you’re prepared to lose. Past performance is not an indication of future results. This content is for educational purposes only and is not investment advice.